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Medical Fraud

Medical Fraud | Legal Definition | Examples | Penalties

Medical Fraud: Who Can Be Held Responsible?

Medi-Cal is California’s Medicaid program. It provides public health insurance coverage for low-income adults and children. Medi-Cal was established in 1966 and now accounts for about a quarter of California’s state budget. It provides health coverage for approximately one in six Californians.

However, Medi-Cal fraud is a white-collar crime in California, and this type of crime is on the rise, costing the state over a billion dollars each year. Because of these facts, Medi-Cal fraud cases are prosecuted aggressively.

What is California Medi-Cal and Medi-Cal Fraud?

California’s Medi-Cal Program offers public health insurance for low-income individuals, including:

The Medi-Cal health insurance program is jointly funded by the state and federal governments. Medi-Cal contracts with established primary and preventive healthcare professionals to provide services to the aforementioned individuals.

Medi-Cal fraud refers to deliberate attempts to receive unauthorized payments or benefits from the Medi-Cal program. Although the most commonly prosecuted Medi-Cal fraud cases involve healthcare providers billing for unauthorized or unnecessary services or supplies, patients can also be charged with Medi-Cal fraud for falsifying information to obtain benefits.

In fact, in Medi-Cal fraud cases, the California Attorney General and the Elder Abuse Unit even offer a reward for information on specific Medi-Cal fraud cases when that information leads to a conviction.

Medi-Cal fraud is specifically prohibited by the California Welfare and Institutions Code. It is generally prohibited by sections of the California Penal Code that deal with general insurance fraud.

Welfare and Institutions Code 14014 WIC penalizes individuals who make false statements about their eligibility in the Medi-Cal program.
Welfare and Institutions Code 14107 WIC punishes providers who make fraudulent reimbursement claims or who solicit or receive bribes or “kickbacks” for referrals for services or goods.
California Penal Code 550 PC knowingly prohibits:

Preparing
Decisions

Submitting fraudulent health insurance claims

California Insurance Fraud

Medi-Cal fraud and, for that matter, workers’ compensation fraud are both covered under the umbrella of California insurance fraud. Penalties for insurance fraud are severe and can include both criminal and civil punishment.

Examples of Medi-Cal Fraud are, in fact, California theft crimes that can range from simple overbilling to sophisticated identity theft. The examples are endless; here are some:

Doctors ordering unnecessary laboratory tests for (or performing unnecessary procedures on) their patients
Providers who “inflate” actual claims
Doctors allowing untrained certified assistants to treat patients (then billing Medi-Cal for a more expensive “doctor” visit)
Doctors allowing Medi-Cal providers to use their billing privileges
Medical supply companies billing for equipment that was neither ordered nor delivered
Medical laboratories billing Medi-Cal for blood tests for “ghost” or “imaginary” patients
Paying or receiving bribes for Medi-Cal billing referrals

It is important to understand that these are only a small sample of the types of Medi-Cal fraud prosecuted. Any intentional misuse of Medi-Cal benefits or services is a criminal offense.

Allowing someone ineligible to use your identification and Medi-Cal benefits
Selling your Medi-Cal identifying information
Reporting false income and asset information on your Medi-Cal application to gain eligibility
Accepting money from a particular Medi-Cal provider in exchange for using their services

Medi-Cal fraud is known as a “wobbler.” This means:

Prosecutors may charge Medi-Cal fraud as either a misdemeanor or a felony. One key factor is the cost of the services or supplies fraudulently billed.

If the value exceeds $950, the offense is a wobbler, in accordance with Penal Code 487 PC (grand theft). If the value of services or supplies obtained fraudulently is $950 or less, prosecutors will file misdemeanor charges, according to Penal Code 484 PC (theft).

That said, it is important to remember that the cost is not the only factor in determining the severity of a Medi-Cal fraud charge. As mentioned earlier, prosecutors also consider your criminal history and the facts of the case.

Misdemeanor Medi-Cal Fraud

The penalties you face will depend on the exact fraud for which you are convicted. As a misdemeanor Medi-Cal fraud, penalties may include some or all of the following:

Felony Medi-Cal Fraud

Similarly, there is a wide range of felony Medi-Cal fraud penalties that judges can impose depending on the exact offense for which you are convicted. For felony Medi-Cal fraud, penalties may include some or all of the following:

Formal probation
16 months to five years in county jail and:
- i) An additional consecutive four years in California state prison for each person who (as a result of and BECAUSE of the fraud) suffers serious bodily injury, or
- ii) 25 years to life if any individual dies as a result of the fraud
Up to $50,000 in fines or double the amount of the fraud (whichever is greater)
Forfeiture of property

Although it seems unlikely that anyone would suffer “serious bodily injury” or be killed as a result of Medi-Cal fraud, it is not as unlikely as it seems:

Reusing syringes
Unnecessary medical procedures
Assigning unqualified personnel to provide treatment

These acts can result in devastating unintended consequences. Such intentional, reckless acts could constitute “criminal negligence,” which would elevate the provider’s culpability and penalties described above.

Similarly, it is difficult to determine what constitutes an “unnecessary” procedure. What one doctor considers necessary, another may not. While you may demonstrate that your decision to perform a questionable procedure was not entirely capricious, it would be difficult to prove that it was unnecessary and therefore fraudulent.

And regarding patients accused of Medi-Cal fraud, perhaps you did not “sell” your identification card. But it was stolen (and you did not know until you were accused of fraud). Perhaps you put incorrect information on a Medi-Cal application, but it was information you honestly (though mistakenly) believed to be true.

Without fraudulent intent, there is no crime.

Burden of Proof

Proving Medi-Cal fraud can be a rigorous task. If the prosecution has gaps—for example, no witnesses to support their case, cannot show a “pattern” of fraudulent activity on your part, or authorities conducted a poor-quality investigation—it would be very difficult to prove Medi-Cal fraud.

Even if the prosecution’s evidence is overwhelming, we can usually negotiate a lesser charge or lighter sentence on your behalf. Many times, by cooperating with investigators and promptly returning illicitly obtained funds, we can reach a leniency agreement or even amnesty. We maintain excellent relationships with local prosecutors and judges, giving us the opportunity to obtain the most favorable results for our clients.

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